Royal Bank of Canada profit up 11% to top views

JudyMcKinnon

Royal Bank of Canada on Wednesday posted an 11% improvement in its quarterly profit, slightly ahead of analyst expectations, though lower earnings in its capital-markets division weighed on stronger results in other segments.

RBC, Canada's second-biggest lender by assets, said lower trading revenue fueled a 14% drop in net income from its capital-markets unit, which it said was hurt by challenging market conditions, mainly in its fixed-income businesses.

The lender is the second of Canada's big banks to be hit with weaker capital-markets results this quarter. Bank of Montreal kicked off bank earnings season in Canada on Tuesday with results that missed expectations, partly due to weaker results from capital markets, which includes trading and advisory services.

Toronto-based RBC said it earned 2.33 billion Canadian dollars ($2.04 billion) in the fiscal fourth quarter ended Oct. 31, up from C$2.10 billion a year earlier.

On a per-share basis, earnings climbed to C$1.57 from C$1.39. Excluding items, the bank said its cash earnings came in at C$1.59 a share, which was a penny better than the Thomson Reuters mean estimate.

The bank's loan-loss provisions rose slightly, to C$346 million from C$334 million. Return on equity rose to 19.0% from 18.8%.

RBC said earnings from its main personal and commercial banking operations improved 8% from a year earlier, including record earnings from Canadian banking, up 11% to C$1.21 billion, while wealth-management earnings jumped 41%.

The bank, which maintained its quarterly dividend at 75 Canadian cents, said the latest results cap off a record year, with earnings reaching C$9 billion for fiscal 2014, up 8% from a year earlier.

"Looking ahead, while we anticipate industry headwinds to persist, we believe RBC is well positioned," Chief Executive Dave McKay said in a statement.

Banks have been pressured by moderating mortgage-lending growth and margin pressure caused by persistently low interest rates, leading some to implement cost-cutting measures.

RBC announced in November it would exit some of its international wealth-management businesses, a move it said would result in an unspecified number of job losses.

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